U.S. businesses boost stockpiles as sales grow

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Workers assemble cars along a line at the General Motors Fairfax plant in Kansas City, Kan.

WASHINGTON (AP) - U.S. businesses restocked their shelves and warehouses in July at the fastest pace since January as their sales rose, a hopeful sign for economic growth.

Business stockpiles increased 0.4 percent in July from June, the Commerce Department said Friday, after ticking up just 0.1 percent the previous month. Total business sales rose 0.6 percent in July, up from just 0.2 percent in June.

Rising stockpiles can be a good sign for the economy because they suggest companies expect greater sales. Greater inventory building also means businesses ordered more goods, boosting factory production and economic growth. And higher sales mean that companies are less likely to be stuck with excess goods.

Business stockpiles in July stood at a seasonally adjusted $1.66 trillion, 3.2 percent higher than a year ago.

A separate report Friday showed that retail sales grew 0.2 percent in August, the slowest pace in four months. Still, July's sales were revised higher to 0.4 percent from 0.2 percent. The figures suggested that consumer spending is growing at a steady but modest pace.

Faster restocking contributed nearly 0.6 percentage points to economic growth in the April-June quarter. The economy expanded 2.5 percent at an annual pace in that period.

Still, economists forecast that growth will likely slow in the current July-September quarter to an annual rate of 2 percent or less. Consumers remain cautious and businesses have cut back on their spending on industrial machinery and other factory goods.

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